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$A higher after RBA upbeat outlook

Jason Cadden

The Australian dollar has threatened to break back above 93 US cents after the Reserve Bank made some positive remarks about the economy.

At 1700 AEST on Tuesday, the local unit was trading at 92.77 US cents, up from 92.51 cents on Monday.

On Tuesday evening, the currency peaked at 92.86 US cents.

As was widely expected, the RBA kept the cash rate at a record low of 2.5 per cent at its board meeting on Tuesday.

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However in the statement that came with the interest rate decision the bank said it expects the unemployment rate will fall in the coming months, which was a departure from comments of recent months.

Forex.com research analyst Chris Tedder said the RBA's announcement had a limited impact on the Australian dollar because there were few changes from the previous statement.

"The bank focused more on the role that resource exports played in supporting the economy in the first quarter, while also dropping one line about weakness in the labour market," he said.

"There was a small relief rally in the Australian dollar following the RBA's decision."

Earlier in the day, the Australian dollar had a brief fall after official figures showed that retail spending continue to grow at sluggish levels in April.

Retail trade rose 0.2 per cent in April after a 0.1 per cent fall in March and a 0.2 rise in February.

The release of Australian March quarter economic growth figures will be a key focus for financial markets on Wednesday.

At 1700 AEST, the Australian dollar was at 94.92 Japanese yen, up from Monday's close of 94.36 yen, and at 68.19 euro cents, up from 67.90 euro cents.

Meanwhile, Australian bond futures prices were slightly lower.

ANZ interest rate strategist Zoe McHugh said bond prices fell after the RBA released their short statement and interest rate decision.

"There perhaps is a little bit of an expectation of the acknowledgment of the weaker data that we've seen but broadly their comments were unchanged and that's resulted in our market selling off a couple of points," she said.

At 1630 AEST on Tuesday, the June 2014 10-year bond futures contract was trading at 96.285 (implying a yield of 3.715 per cent), down from 96.335 (3.665 per cent) on Monday.

The June 2014 three-year bond futures contract was at 97.220 (2.780 per cent), down from 97.240 (2.760 per cent).